The Energy Select Sector SPDR (NYSEArca: XLE), the largest equity-based energy ETF, has recently been gaining momentum, posting a gain of almost 8% over the past month in what could be a sign that the once downtrodden sector is poised to shed its laggard status.

XLE targets the Energy Select Sector Index and “seeks to provide precise exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries,” according to State Street.

XLE has built some momentum following recent earnings reports from Dow components Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX), the two largest U.S. oil companies and some market observers believe the energy sector is poised for more near-term upside.

“You’re approaching the time of year when you do tend to see a mean reversion to the laggards … so with energy being the worst performer, you could start to see a shift into the energy between now and the early part of next year,” said Mark Newton, founder of Newton Advisors, in an interview with CNBC.

Value With XLE

One reason some investors may be revisiting XLE is that the energy sector is being viewed as a value destination and there has recently been a rotation to value away from growth.

Analysts also expect the volume of U.S. crude oil in storage should diminish in the weeks ahead before reversing course at the end of peak driving season, along with the start of the seasonal refinery maintenance period.

Still, not everyone’s convinced that energy’s recent rebound can extend for a significant amount of time.

“Energy has definitely been through a really tough time given sort of all the expansion in supply because of technological changes in the industry. However, you still have a little bit more to go, I think, in the downward trend in oil overall,” said Gina Sanchez, CEO of Chantico Global, to CNBC.

Related: Consider This Global Energy ETF For Dividends 

Energy forecasters anticipate a deteriorating supply in 2020, placing OPEC+ in a bind. But beyond that, the slackening could result in a boom as supply growth slows down.

OPEC encounters a similar situation as it readies for its December meeting, and the prospect of another year of oversupply continues.

Investors have added nearly $297 million to XLE since the start of the fourth quarter.

For more information on the energy sector, visit our energy category.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.